Free «IT Governance» Essay Sample
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Alcan can be classified as an efficient, predictable Operator because they have a lower rate of change and their competitive advantage is the operational efficiency. Since its inception, Alcan has kept on dealing with the same products introducing new products in slow rate.
They operate in many countries, and their production is consistent. Because they have dealt with the same products for a long period, it can be predicted that they will stay in for the long term in the future. They also deal with products that cannot be easily affected by technologies (Melnicoff, Shearer, & Goyal, 2005). Alcan can be said to practice the following governance styles:
At Alcan, top business executives make IT decisions that affect the entire business. It is noted that one time the position of IT director was vacant for a period of one year. The decisions about IT come from the top business management executives, and the work of the IT department is to implement what the top management has set. This method is fair because business executives will make decisions, which will be fair to all the business groups. However, the particular need of each business group may not be addressed as required; thus, this may lead to misunderstanding between the management and business groups (Weill, 2004).
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At Alcan, each business group has its own IT applications. Each group deals with its own services, plans, and strategies concerning IT. There is no cooperation and integration when dealing with IT issues. In this way, IT expertise in one business group is not going to benefit other business groups because each group is not willing to share their expertise with other groups (Weill, 2004).
Governance style is structured like this at Alcan because of the following reasons:
- There is no coordination among the various business groups
- Existence of a very complex management
- Alcan consists of many business groups with different IT needs
- Alcan operates in many countries, and having a centralized IT governance is challenging.
Each business group will take their priorities right concerning IT. Certain IT infrastructure is more beneficial to one group of business than the other is. Because of this, if central management of IT is carried out, there will be a contradiction on issues of priorities. Therefore, the style provides flexibility (Weill, 2004).
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There is an amount of incentives for each business group to develop the IT infrastructure. The independence of each business group will promote competition in all fields including IT. In one way or another, it will promote profitability of the various business groups.
Because there is no centralized management, there is no cooperation and coordination; therefore, forcing business groups to seek expertise from the outside. Seeking expertise from the outside means extra costs, and, therefore, a reduction in profits.
IT projects will not be delivered early, and, in most cases, it results in extra costs than projected. When the project takes too long to be completed, it means that it is going to take too long to the breakeven, and the benefit from that project will obviously delay.
The method assumes that all people are rational making decisions on economic grounds and attempt to maximize their own utility functions, which is not the case.
If I were the CIO of Alcan, I would have resorted to a fully IT monarchy style where the CIO is the one to report the issues of IT governance to the top business executive. However, I will ensure that each business group has an assistant CIO to deal with IT issues affecting their particular business group. In this way, the IT needs of every business group will be addressed, and the problem of conflict of priorities will be minimized. This style is all round because it addresses the disadvantages of other styles while, at the same time, maintaining their advantages.
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This style will improve cooperation and coordination among businesses. Consequently, a problem affecting one business group can be dealt with by the expertise from other business groups. In this way, outsourcing will be minimized leading to reduction in costs.
Ouellette’s plans were on the idea of catching the attention of the management and business groups to address the problem of system diversity and to standardize and consolidate IT infrastructure. The idea of changing IT governance model was also addressed. The aims of Ouelette plans were to reduce cost of projects and late delivery. The issues in this plan are among the ones that I addressed. Additionally, the plan is supporting my recommendations. If implemented wisely, Ouelette’s plans will results in better governance of IT at Alcan. However, as much as the standardization is concerned, it should address the general standards only and give each business group an opportunity to address their detail issues concerning IT governance (Shen & Huang, 2011).
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Ouelette’s plans are consistent with the recommendations made by Accenture experts. According to Accenture experts, for efficient predictable operators, IT should keep the cost low and provide mature capabilities by making use of cost saving devices. The use of Shared services was recommended as well as co-sourcing and outsourcing. These are the same issues that Ouellette’s plans tried addressing. However, no business can strictly fit to the classifications of Accenture. To that effect, Alcan may not only implement the recommendation of Accenture and Ouellette’s and be satisfied, but they should be ready to adjust where they see fit for themselves (Shen & Huang, 2011).